Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Concerning the Clearing Trading Permit Holder Proprietary Transaction Fee Waiver for Orders in Multiply-Listed FLEX Options Classes, 58063-58065 [2011-23897]

Download as PDF Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices (B) Self-Regulatory Organization’s Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: mstockstill on DSK4VPTVN1PROD with NOTICES Electronic Comments • Use the Commissions Internet comment form (http://www.sec.gov/ rules/sro.shtml) or send an e-mail to rule-comments@sec.gov. Please include File Number SR–OCC–2011–12 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OCC–2011–12. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml.) Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule VerDate Mar<15>2010 15:46 Sep 16, 2011 Jkt 223001 change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filings will also be available for inspection and copying at the principal office of OCC and on OCC’s Web site at http:// www.optionsclearing.com/components/ docs/legal/rules_and_bylaws/sr_occ_11 _12.pdf. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–OCC–2011–12 and should be submitted on or before October 11, 2011. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.5 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–23976 Filed 9–16–11; 8:45 am] BILLING CODE 8011–01–P 58063 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Fees Schedule. The text of the proposed rule change is available on the Exchange’s Web site (http:// www.cboe.org/legal), at the Exchange’s Office of the Secretary, and at the Commission. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65325; File No. SR–CBOE– 2011–085] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Concerning the Clearing Trading Permit Holder Proprietary Transaction Fee Waiver for Orders in Multiply-Listed FLEX Options Classes September 12, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 31, 2011, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 5 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 34– 65007 (August 2, 2011), 76 FR 48190 (August 8, 2011) (SR–CBOE–2011–071). 1 15 PO 00000 Frm 00117 Fmt 4703 On August 1, 2011, the Exchange implemented a waiver of the Clearing Trading Permit Holder (‘‘CTPH’’) Proprietary Transaction Fee (the ‘‘Fee’’) for CTPHs executing facilitation orders in multiply-listed FLEX Options classes (the ‘‘Waiver’’).3 At that time, the Exchange intended to exclude from the Waiver such orders originating from joint back-office (‘‘JBO’’) participants, but due to an oversight, such orders were not excluded. Therefore, the Exchange now proposes to amend the Waiver to exclude such orders originating from JBO participants. A JBO is an arrangement whereby a broker/dealer maintains a nominal ownership interest in its clearing firm. The clearing firm will issue a special class of non-voting preferred stock to other broker/dealers that clear their proprietary positions through the clearing firm. JBO participants are not considered self-clearing for any purpose other than the extension of credit under CBOE Rule 12.3 or under comparable Sfmt 4703 E:\FR\FM\19SEN1.SGM 19SEN1 58064 Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES rules of another self-regulatory organization.4 JBOs are separate entities from the CTPHs with which they maintain an arrangement, and do not have a complete common identity of ownership with the CTPHs. JBOs take advantage of the exposure across the market that CTPHs afford and use CTPHs for margin relief. While JBO trades come into market with the same origin code as CTPHs, these trades are executed on behalf of the JBO and not the CTPHs. CTPHs have various obligations, such as clearing accounts and settling trades, and must abide by certain requirements, such as those regarding books and records, and risk analysis, that JBOs do not. Moreover, unlike CTPHs, JBOs do not guarantee performance on contracts, and if a JBO backs out of a position or otherwise cannot maintain a position that the JBO had taken, the CTPH is still on the hook to maintain that JBO position. Also, unlike CTPHs, JBOs are not self-clearing for the purposes of facilitation.5 Further, CTPHs must work with the Options Clearing Corporation (‘‘OCC’’) to clear trades and satisfy OCC requirements on subjects such as capital requirements, which JBOs do not need to satisfy. In recognition of the obligations and liabilities that CTPHs possess and which JBOs do not possess, and because JBOs are not self-clearing for the purposes of facilitation, the Exchange does not at the present time desire to provide the Waiver to JBOs, and therefore proposes to exclude JBOs from the Waiver. Finally, the Exchange currently excludes JBO orders from the Fee Cap and Sliding Scale.6 Excluding JBOs from the Waiver helps to achieve a level of consistency in the Fees Schedule. As previously stated, JBO trades come into the market with the same origin code as CTPHs. However, CTPHs may possess different clearing firm numbers; each CTPH has a number for its own trades, and a different number for each JBO. Therefore, JBO trades will be identified and differentiated from CTPH trades by these different numbers. The proposed rule change would take effect on September 1, 2011. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Sections 6(b)(4) 8 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE Trading Permit Holders and other persons using Exchange facilities. The Exchange believes that amending the Waiver to exclude JBO orders is reasonable because the amount of the fee, either $0.20 or $0.25 per contract (depending on the product), is within the range of fees assessed by the Exchange for other orders charged to other market participants for the same product.9 Indeed, up until August 1, 2011 (one month ago), when the Waiver was instituted and unintentionally included JBO trades, JBOs paid this amount for firm facilitation orders in multiply-listed FLEX Options classes. The Exchange believes amending the Waiver to exclude JBO orders is equitable and not unfairly discriminatory because, unlike CTPHs, JBOs are not self-clearing for the purposes of facilitation,10 and because CTPHs have a number of obligations, responsibilities and liabilities that JBOs do not possess. These obligations include clearing accounts, settling trades, and must abide by certain requirements, such as those regarding books and records, and risk analysis. Moreover, unlike CTPHs, JBOs do not guarantee performance on contracts, and if a JBO backs out of a position or otherwise cannot maintain a position that the JBO had taken, the CTPH is still on the hook to maintain that JBO position. Further, CTPHs must work with the OCC to clear trades and satisfy OCC requirements on subjects such as capital requirements, which JBOs do not need to satisfy. In recognition of the obligations and liabilities that CTPHs possess and which JBOs do not possess, and because JBOs are not self-clearing for the purposes of facilitation, the Exchange believes it is equitable and not unfairly discriminatory to exclude JBOs from the Waiver. Finally, the Exchange currently excludes JBO orders from the Fee Cap and Sliding Scale.11 Excluding JBOs from the Waiver helps to achieve 7 15 4 See CBOE Rule 13.4, Interpretation and Policy .01. 5 See CBOE Rule 13.4, Interpretation and Policy .01. 6 See Exchange Fees Schedule section regarding the Multiply-Listed Options Fee Cap and the CBOE Proprietary Products Sliding Scale for Clearing Trading Permit Holder Proprietary Orders. VerDate Mar<15>2010 15:46 Sep 16, 2011 Jkt 223001 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4). 9 See Exchange Fees Schedule, Section 1. 10 See CBOE Rule 13.4, Interpretation and Policy .01. 11 See Exchange Fees Schedule section regarding the Multiply-Listed Options Fee Cap and the CBOE Proprietary Products Sliding Scale for Clearing Trading Permit Holder Proprietary Orders. PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 a level of consistency in the Fees Schedule. The Exchange operates in a highly competitive market in which sophisticated and knowledgeable market participants readily can, and do, send order flow to competing exchanges based on fee levels. The Exchange believes that the fees it assesses must be competitive with fees assessed on other options exchanges. The Exchange believes that this competitive marketplace impacts the fees present on the Exchange today and influences the proposals set forth above. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change is designated by the Exchange as establishing or changing a due, fee, or other charge, thereby qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A) of the Act12 and subparagraph (f)(2) of Rule 19b–413 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File 12 15 13 17 E:\FR\FM\19SEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 19SEN1 Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices Number SR–CBOE–2011–085 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–65330; File No. SR–BX– 2011–046] • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change All submissions should refer to File To Amend the BOX Fee Schedule With Number SR–CBOE–2011–085. This file Respect to Credits and Fees for number should be included on the Transactions in the BOX Price subject line if e-mail is used. To help the Improvement Period Commission process and review your September 13, 2011. comments more efficiently, please use only one method. The Commission will I. Introduction post all comments on the Commission’s On July 15, 2011, NASDAQ OMX BX, Internet Web site (http://www.sec.gov/ Inc. (the ‘‘Exchange’’) filed with the rules/sro.shtml). Copies of the Securities and Exchange Commission submission, all subsequent (the ‘‘Commission’’), pursuant to amendments, all written statements Section 19(b)(1) of the Securities with respect to the proposed rule Exchange Act of 1934 (‘‘Exchange Act’’ change that are filed with the or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Commission, and all written a proposed rule change to amend the communications relating to the Fee Schedule of the Boston Options proposed rule change between the Exchange Group, LLC (‘‘BOX’’) to Commission and any person, other than increase the credits and fees for certain transactions in the BOX Price those that may be withheld from the Improvement Period (‘‘PIP’’).3 The public in accordance with the proposed rule change was immediately provisions of 5 U.S.C. 552, will be effective upon filing with the available for Web site viewing and Commission pursuant to Section printing in the Commission’s Public 19(b)(3)(A) of the Act.4 Notice of filing Reference Room, 100 F Street, NE., of the proposed rule change was Washington, DC 20549, on official published in the Federal Register on business days between the hours of 10 August 3, 2011.5 a.m. and 3 p.m. Copies of such filing Under Section 19(b)(3)(C) of the Act, also will be available for inspection and the Commission is (1) hereby copying at the principal office of the temporarily suspending File No. SR– Exchange. All comments received will BX–2011–046, and (2) instituting be posted without change; the proceedings to determine whether to Commission does not edit personal approve or disapprove File No. SR–BX– identifying information from 2011–046. submissions. You should submit only II. Summary of the Proposed Rule information that you wish to make Change available publicly. All submissions should refer to File Number SR–CBOE– The Exchange proposes to increase 2011–085 and should be submitted on the credits and fees for certain or before October 11, 2011. transactions in the PIP by modifying For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–23897 Filed 9–16–11; 8:45 am] mstockstill on DSK4VPTVN1PROD with NOTICES BILLING CODE 8011–01–P 14 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 15:46 Sep 16, 2011 Jkt 223001 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The PIP is a mechanism in which a BOX Options Participant submits an agency order on behalf of a customer for price improvement, paired with a contra-order guaranteeing execution of the agency order at or better than the National Best Bid or Offer (‘‘NBBO’’). The contra-order could be for the account of the Options Participant, or an order solicited from someone else. The agency order is exposed for a one-second auction in which other BOX Options Participants may submit competing interest at the same price or better. The initiating BOX Options Participant is guaranteed 40% of the order (after public customers) at the final price for the PIP order, assuming it is at the best price. See Chapter V, Section 18 of the BOX Rules. 4 15 U.S.C. 78s(b)(3)(A). 5 See Securities Exchange Act Release No. 64981 (July 28, 2011) 76 FR 46858 (‘‘Notice’’). 2 17 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 58065 Section 7d of the BOX Fee Schedule. Specifically, the Exchange proposes to: (1) Increase both the credits and the fees for PIP transactions in classes that are not subject to the Penny Pilot (‘‘NonPenny classes’’) from $0.30 to $0.75 per contract; and (2) increase both the credits and the fees for PIP transactions in Penny Pilot classes where the trade price is equal to or greater than $3.00 per contract (other than in QQQQ, SPY, and IWM) from $0.30 to $0.75 per contract. The credits and the fees for PIP transactions in QQQQ, SPY, and IWM and in all other Penny Pilot classes where the trade price is less than $3.00 per contract will remain at $0.30 per contract. The credits are paid by the Exchange on the agency order that is submitted to the PIP auction on behalf of a customer. The fees are charged by the Exchange to the order that is executed against the agency order, whether such order is a paired order submitted by the BOX Options Participant that also submitted the agency order or an order submitted by another BOX Options Participant in response to the PIP auction. The credits and fees are in addition to any applicable trading fees, as described in Sections 1 through 3 of the BOX Fee Schedule.6 III. Suspension of SR–BX–2011–046 Pursuant to Section 19(b)(3)(C) of the Act,7 at any time within 60 days of the date of filing a proposed rule change pursuant to Section 19(b)(1) of the Act,8 the Commission summarily may temporarily suspend the change in the rules of a self-regulatory organization if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. The Commission believes it is appropriate to evaluate the effect of the proposed rule change on competition among different types of market participants and on market quality, particularly with respect to the net fee differential that it would place on BOX Options Participants that respond to a PIP auction (‘‘PIP Responders’’) compared to a BOX Options Participant that initiated the PIP auction (‘‘PIP Initiator’’). Under the proposed rule change, the Exchange would charge 6 Sections 1 through 3 of the Box Fee Schedule include a $0.25 per contract transaction fee for contracts traded in the PIP. Depending on its average daily volume (‘‘ADV’’), a Participant who initiates PIP auctions may be charged a lower per contract fee. See Section 7d. of the Box Fee Schedule. See also infra note 9. 7 15 U.S.C. 78s(b)(3)(C). 8 15 U.S.C. 78s(b)(1). E:\FR\FM\19SEN1.SGM 19SEN1

Agencies

[Federal Register Volume 76, Number 181 (Monday, September 19, 2011)]
[Notices]
[Pages 58063-58065]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23897]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65325; File No. SR-CBOE-2011-085]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Concerning the Clearing Trading Permit Holder 
Proprietary Transaction Fee Waiver for Orders in Multiply-Listed FLEX 
Options Classes

September 12, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 31, 2011, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's Office of the Secretary, and at 
the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On August 1, 2011, the Exchange implemented a waiver of the 
Clearing Trading Permit Holder (``CTPH'') Proprietary Transaction Fee 
(the ``Fee'') for CTPHs executing facilitation orders in multiply-
listed FLEX Options classes (the ``Waiver'').\3\ At that time, the 
Exchange intended to exclude from the Waiver such orders originating 
from joint back-office (``JBO'') participants, but due to an oversight, 
such orders were not excluded. Therefore, the Exchange now proposes to 
amend the Waiver to exclude such orders originating from JBO 
participants.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 34-65007 (August 2, 
2011), 76 FR 48190 (August 8, 2011) (SR-CBOE-2011-071).
---------------------------------------------------------------------------

    A JBO is an arrangement whereby a broker/dealer maintains a nominal 
ownership interest in its clearing firm. The clearing firm will issue a 
special class of non-voting preferred stock to other broker/dealers 
that clear their proprietary positions through the clearing firm. JBO 
participants are not considered self-clearing for any purpose other 
than the extension of credit under CBOE Rule 12.3 or under comparable

[[Page 58064]]

rules of another self-regulatory organization.\4\
---------------------------------------------------------------------------

    \4\ See CBOE Rule 13.4, Interpretation and Policy .01.
---------------------------------------------------------------------------

    JBOs are separate entities from the CTPHs with which they maintain 
an arrangement, and do not have a complete common identity of ownership 
with the CTPHs. JBOs take advantage of the exposure across the market 
that CTPHs afford and use CTPHs for margin relief. While JBO trades 
come into market with the same origin code as CTPHs, these trades are 
executed on behalf of the JBO and not the CTPHs. CTPHs have various 
obligations, such as clearing accounts and settling trades, and must 
abide by certain requirements, such as those regarding books and 
records, and risk analysis, that JBOs do not. Moreover, unlike CTPHs, 
JBOs do not guarantee performance on contracts, and if a JBO backs out 
of a position or otherwise cannot maintain a position that the JBO had 
taken, the CTPH is still on the hook to maintain that JBO position. 
Also, unlike CTPHs, JBOs are not self-clearing for the purposes of 
facilitation.\5\ Further, CTPHs must work with the Options Clearing 
Corporation (``OCC'') to clear trades and satisfy OCC requirements on 
subjects such as capital requirements, which JBOs do not need to 
satisfy. In recognition of the obligations and liabilities that CTPHs 
possess and which JBOs do not possess, and because JBOs are not self-
clearing for the purposes of facilitation, the Exchange does not at the 
present time desire to provide the Waiver to JBOs, and therefore 
proposes to exclude JBOs from the Waiver. Finally, the Exchange 
currently excludes JBO orders from the Fee Cap and Sliding Scale.\6\ 
Excluding JBOs from the Waiver helps to achieve a level of consistency 
in the Fees Schedule.
---------------------------------------------------------------------------

    \5\ See CBOE Rule 13.4, Interpretation and Policy .01.
    \6\ See Exchange Fees Schedule section regarding the Multiply-
Listed Options Fee Cap and the CBOE Proprietary Products Sliding 
Scale for Clearing Trading Permit Holder Proprietary Orders.
---------------------------------------------------------------------------

    As previously stated, JBO trades come into the market with the same 
origin code as CTPHs. However, CTPHs may possess different clearing 
firm numbers; each CTPH has a number for its own trades, and a 
different number for each JBO. Therefore, JBO trades will be identified 
and differentiated from CTPH trades by these different numbers.
    The proposed rule change would take effect on September 1, 2011.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Sections 6(b)(4) \8\ 
of the Act in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBOE Trading Permit Holders and other persons using Exchange 
facilities. The Exchange believes that amending the Waiver to exclude 
JBO orders is reasonable because the amount of the fee, either $0.20 or 
$0.25 per contract (depending on the product), is within the range of 
fees assessed by the Exchange for other orders charged to other market 
participants for the same product.\9\ Indeed, up until August 1, 2011 
(one month ago), when the Waiver was instituted and unintentionally 
included JBO trades, JBOs paid this amount for firm facilitation orders 
in multiply-listed FLEX Options classes.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ See Exchange Fees Schedule, Section 1.
---------------------------------------------------------------------------

    The Exchange believes amending the Waiver to exclude JBO orders is 
equitable and not unfairly discriminatory because, unlike CTPHs, JBOs 
are not self-clearing for the purposes of facilitation,\10\ and because 
CTPHs have a number of obligations, responsibilities and liabilities 
that JBOs do not possess. These obligations include clearing accounts, 
settling trades, and must abide by certain requirements, such as those 
regarding books and records, and risk analysis. Moreover, unlike CTPHs, 
JBOs do not guarantee performance on contracts, and if a JBO backs out 
of a position or otherwise cannot maintain a position that the JBO had 
taken, the CTPH is still on the hook to maintain that JBO position. 
Further, CTPHs must work with the OCC to clear trades and satisfy OCC 
requirements on subjects such as capital requirements, which JBOs do 
not need to satisfy. In recognition of the obligations and liabilities 
that CTPHs possess and which JBOs do not possess, and because JBOs are 
not self-clearing for the purposes of facilitation, the Exchange 
believes it is equitable and not unfairly discriminatory to exclude 
JBOs from the Waiver. Finally, the Exchange currently excludes JBO 
orders from the Fee Cap and Sliding Scale.\11\ Excluding JBOs from the 
Waiver helps to achieve a level of consistency in the Fees Schedule.
---------------------------------------------------------------------------

    \10\ See CBOE Rule 13.4, Interpretation and Policy .01.
    \11\ See Exchange Fees Schedule section regarding the Multiply-
Listed Options Fee Cap and the CBOE Proprietary Products Sliding 
Scale for Clearing Trading Permit Holder Proprietary Orders.
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market in which 
sophisticated and knowledgeable market participants readily can, and 
do, send order flow to competing exchanges based on fee levels. The 
Exchange believes that the fees it assesses must be competitive with 
fees assessed on other options exchanges. The Exchange believes that 
this competitive marketplace impacts the fees present on the Exchange 
today and influences the proposals set forth above.

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change is designated by the Exchange as 
establishing or changing a due, fee, or other charge, thereby 
qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A) 
of the Act\12\ and subparagraph (f)(2) of Rule 19b-4\13\ thereunder. At 
any time within 60 days of the filing of the proposed rule change, the 
Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File

[[Page 58065]]

Number SR-CBOE-2011-085 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-085. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2011-085 and should be 
submitted on or before October 11, 2011.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23897 Filed 9-16-11; 8:45 am]
BILLING CODE 8011-01-P